Legislature(2017 - 2018)BUTROVICH 205
02/20/2017 03:30 PM Senate RESOURCES
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| Overview: University of Alaska Land Grant Status | |
| Adjourn |
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ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 20, 2017
3:31 p.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator John Coghill, Vice Chair
Senator Shelley Hughes
Senator Kevin Meyer
Senator Bill Wielechowski
MEMBERS ABSENT
Senator Natasha von Imhof
Senator Bert Stedman
COMMITTEE CALENDAR
OVERVIEW: UNIVERSITY OF ALASKA LAND GRANT STATUS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JIM JOHNSEN, President
University of Alaska Anchorage (UAA)
Anchorage, Alaska
POSITION STATEMENT: Provided overview of the University of
Alaska's (UA) land grant status.
ANDY HARRINGTON, Associate General Counsel
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Commented on UA's land grant status.
KIT DUKE, Director
Facilities and Maintenance
University of Alaska Anchorage (UAA)
Anchorage, Alaska
POSITION STATEMENT: Commented on UA's land grant status.
ACTION NARRATIVE
3:31:01 PM
CHAIR CATHY GIESSEL called the Senate Resources Standing
Committee meeting to order at 3:31 p.m. Present at the call to
order were Senators Coghill, Wielechowski, Meyer, and Chair
Giessel.
^Overview: University of Alaska Land Grant Status
Overview: University of Alaska Land Grant Status
3:31:33 PM
CHAIR GIESSEL announced that the committee would take up one
item today, the overview of the land grant status for the
University of Alaska (UA). The Resources Committee is interested
in this subject, because it concerns the issue of possession of
lands through grants, and Alaska received land grants because of
the Statehood Act to Alaska Native Regional Corporations through
the Alaska Native Claims Settlement Act (ANCSA), and through the
Alaska National Interest Lands Conservation Act (ANILCA). Who
has possession of the land and what they are allowed to do with
it has significant implications. In these fiscally challenging
times, it's important to constantly ask the question about how
our key government services function and how they are funded.
CHAIR GIESSEL said she often hears from constituents that the
University should simply sell their land and then they could be
completely funded. However, the University of Alaska is the
state's land grant university, and like our state, the
University needs to leverage the value of its land to promote
essential services and educational opportunities. If that's not
happening, they should know why.
She said this committee has had well-rounded exposure to the
University of Alaska. Senator Hughes, chair of the Education
Committee, has had President Johnsen before that committee to
talk about the University, and the Finance Committee heard an
overview of their budget just last week. So, today she hoped to
get further insight into the land grant opportunities that the
University has. She welcomed President Johnson to the table.
3:33:26 PM
JIM JOHNSEN, President, University of Alaska, Anchorage, Alaska,
said he appreciated this opportunity to shed some light on one
reason why the University has historically relied on the
legislature so heavily for funding, which is because of the land
grant deficit. Second, he wanted to educate and discuss with the
legislature and get their views of his approach going forward.
He had experts on line to address questions.
3:34:13 PM
SENATOR HUGHES joined the committee.
3:34:21 PM
MR. JOHNSEN said he would walk through four steps:
1. Provide land grant deficit history.
2. Share current thinking on a solution.
3. Review existing holdings
4. Provide a primer on the UAA Land Trust balance, the entity
into which these lands would go, and how it is used now, because
that may foreshadow how increased proceeds could be used going
forward.
3:35:03 PM
MR. JOHNSEN said that only Delaware received a smaller land
grant than the University of Alaska, and Hawaii got cash in lieu
of a land grant, but some states are so small that their names
can't be written on a map, like Rhode Island, Connecticut, and
Massachusetts. Those states all got grants larger than Alaska's.
It makes no sense.
He said that Alaska received .11 percent of the state's land
grant at statehood; it amounted to approximately 110,000 acres,
but that increased to close to 500,000 acres under the various
federal acts. So the current deficit is about 360,000 acres.
3:36:18 PM
MR. JOHNSEN said in 1862, President Lincoln passed the Morrill
Act that created land grant universities all across the country
for work force development and to develop the frontier.
3:36:56 PM
In 1915, Territorial Delegate James Wickersham got a statute
through Congress to provide some land for what was then the
Alaska Agricultural College and School of Mines.
3:37:37 PM
In 1929, the Sutherland Land Grant Statute granted an additional
100,000 acres of land to the Territory for the exclusive use of
the Alaska Agricultural College and School of Mines. In 1935, it
became the University of Alaska.
3:37:49 PM
An early version of the statehood bill set aside 10 million
acres for the University of Alaska. But the final Statehood Act
was a whole lot different: it repealed the Wickersham land grant
of 1915 and removed Alaska's eligibility for Morrill Act lands,
all the while giving a substantial grant of 103 million acres to
the state. The University got nothing. Congress's expectation
was that the University's land grant would be included in the
state's land grant. In other words, the state would just turn,
pivot, and grant it some land and everybody would be good.
MR. JOHNSEN said one of the first acts of the first Alaska
Legislature in 1959 was to grant the University 1 million acres.
That was vetoed by Governor Egan. Additional land bills have
been passed by Congress over the years, but full transfer of
those lands are still in many cases to be finished, and the
University's land grant, despite those various attempts, remains
unresolved.
3:39:16 PM
CHAIR GIESSEL asked why Governor Egan vetoed the 1 million
acres.
ANDY HARRINGTON, Associate General Counsel, University of
Alaska, Fairbanks, Alaska, answered that Governor Egan was
concerned about the anti-dedication clause in the Constitution.
MR. JOHNSON said between 1997 and 2005 several bills were
introduced in an attempt to address the deficit, but none were
successful. However, significant progress was made in 2000 when
the State Legislature authorized the University to select
260,000 acres of land, but that got vetoed. The legislature
overrode that veto, and then the issue went to the Supreme
Court, the question being whether a conveyance of land was or
was not an appropriation for purposes of an override. The court
ruled it was not, but the dedication issue was unresolved.
The University went to work selecting lands and identified them
in HB 130. That went back to the Supreme Court and the state was
found to have violated the dedication clause of the
Constitution, so the University started handing land back to
DNR.
3:42:07 PM
Is there a solution? Mr. Johnson said they believe there is.
He said the deficit is now approximately 360,000 acres. A
permanent land endowment would be very beneficial for the
University in years to come. It would allow it over time to
moderate the reliance it has on the general fund. Many Alaskan
heroes have attempted to remedy the deficit, but the
Constitution is pretty clear in the Supreme Court's mind. And
the federal government is supportive in general, but has said
"we gave you the land." Everyone wants the University to have
more land, but the question is who is going to pay for it.
3:43:22 PM
MR. JOHNSEN said the Constitution's anti-dedication clause has
an exception that says: "Except when required by the federal
government for state participation in federal programs." So, now
the University is in preliminary discussions with the DNR and
the congressional delegation on federal legislation to establish
precisely that program.
3:44:05 PM
CHAIR GIESSEL said the state participates in the federal student
loan program and asked if that is the kind of federal program he
is talking about.
MR. HARRINGTON answered that the federal student loan program is
one of many different types of programs that have federal/state
cooperation, but the concept they are marketing with the federal
congressional delegation now follows the voluntary state/federal
cooperative model that basically sets up a permanent land
endowment to consist of a mix of state and federal lands. If the
state doesn't want to put any lands into this program, then it
doesn't participate, and the federal government has no
obligation to hand over any lands either. The mix of lands would
then constitute the UA permanent land endowment.
SENATOR HUGHES asked if the program could be set up through a
regulatory framework or would it take an act of congress.
MR. HARRINGTON answered it would take an act of congress, and
they are cautiously optimistic that in its current
configuration, congress might be receptive.
3:47:37 PM
SENATOR WIELECHOWSKI asked if the congress passed an act and the
state set up its own program, would the legislature still be
required to make the appropriation or would the funds
automatically transfer into the University's Trust Fund.
MR. HARRINGTON answered that the lands would be in the hands of
the UA Board of Regents who would develop income and revenues
from those lands, and those would not require annual
appropriation from the legislature. The thought is that the land
endowment wouldn't ever get to the point of completely replacing
the general fund contribution. So, the University would still be
subject to the discretion of the legislature for some revenues.
3:49:35 PM
SENATOR WIELECHOWSKI asked if he was aware of any dedicated fund
issues that the state would have in doing that.
MR. HARRINGTON answered that he couldn't pretend comprehensive
knowledge of dedicated funds. The Supreme Court said there are
three exceptions: one is the Permanent Fund, another is
dedicated funds that existed at the time the Constitution was
ratified, and the third is any dedications when they are
required by the federal government for state participation in
federal programs. He didn't know how many situations like that
fit into one of those three exemptions aside from the Permanent
Fund.
3:51:15 PM
SENATOR WIELECHOWSKI said the Fish and Game Fund, the cigarette
tax fund, and the highway fund require further legislative
appropriation, and the only one that has a direct transfer is
the Permanent Fund, which the state is arguing before the
Supreme Court right now in a case he is involved with. The
ruling in that case could have a big impact on the ability to
get money transferred directly to the University.
MR. HARRINGTON said he agreed.
3:52:10 PM
MR. JOHNSEN said it would be helpful to review current land
holdings and how they are utilized. They have approximately
151,000 acres of land, most of it acquired under the 1929
Sutherland Act, from other parties and local state or federal
governments. For example, a couple of community campuses are on
lands donated by those communities to further the interests of
vocational and technical education.
He said the University has a statewide land management office
that is responsible for managing, developing, acquiring, and
disposing of the University's real property, and since 1987 they
have generated over $200 million from them. That income is
deposited into the University's Land Grant Endowment Trust Fund,
a permanent endowment. It generates earnings that are used for
various educational purposes and research, particularly purposes
related to natural resources: fisheries research, ocean
sciences, biology, and agriculture. Perhaps the single most
important purpose for the last 18 years has been the use of
these funds to pay for the Alaska scholars program that awards a
$12,000 tuition scholarship to the top 10 percent of Alaska's
high school graduates if they attend the University of Alaska.
Since the formation of the Alaska Scholars Program, 3,882
Alaskans have graduated benefiting from this program.
MR. JOHNSEN said their intent is to deposit these lands into the
endowment and to use the generated revenues for educational
purposes.
3:54:23 PM
CHAIR GIESSEL asked about the National Park Service.
MR. JOHNSEN responded that the university has about 30 National
Park Service in-holdings around the state. A slide summarized
the uses of the 150,000 acres; 12,000 acres have an educational
purpose: their campuses are on those lands. That leaves 138,000
acres for investment purposes. He provided a description of how
those lands are allocated and said they simply haven't had the
opportunity to really assess the commercial monetary value of
the 96,000 remaining acres. Their land holdings now include
timber development, park inholdings, and current subdivisions,
material sales (gravel and the like), and about 2,000 acres of
potential oil and gas development.
SENATOR GIESSEL asked what kind of access challenges he has with
the National Park Service.
MR. JOHNSEN responded that he couldn't say specifically where
the access issues are, but they do have serious challenges,
which constrains the monetary value of those particular
inholdings.
3:56:34 PM
KIT DUKE, Director, Facilities and Maintenance, University of
Alaska Anchorage (UAA), Anchorage, Alaska, said those properties
are in the Wrangell Saint Elias National Park around the
McCarthy area, and some are in Southeast and the Chugach. All of
them have access challenges. They are called in-holdings,
because there is no way to get to those parcels other than maybe
float down a river or fly. She said they had been able to
monetize a couple of parcels recently: one as a sale to the Park
Service and one as a trade for land that was in the Seward area
and accessible by road.
3:57:41 PM
MR. JOHNSEN said he would provide maps and follow-up
information, so they can see precisely where the land holdings
are located. Other parcels are near White Mountain east of
Fairbanks, and near the Gulf of Alaska.
SENATOR MEYER said it looks like the bulk of their acreage is on
the Gulf of Alaska.
3:59:17 PM
SENATOR WIELECHOWSKI said he was curious about the HB 130 lands
that the University selected.
MR. JOHNSEN said he would be happy to include that as well.
SENATOR COGHILL said he was interested in knowing who bore the
cost of all the selections.
MR. JOHNSEN said he would find that out also.
SENATOR MEYER said slide 11 indicated 17,000 acres of potential
timber development and asked if he is aggressively trying to
develop it.
MR. JOHNSEN replied that they have absolutely harvested timber
and have an active timber harvest program; Ms. Duke could go
through the details. He added that timber provides a substantial
amount of revenue.
SENATOR MEYER said he also wanted to know more about where the
potential oil and gas development is located.
MS. DUKE responded that they are working closely with the DNR's
Division of Forestry and the Mental Health Trust Land Office to
do coordinated offerings of sales. They have completed two in
the last two years bringing in about $1 million. So, it is
possible to be in the timber business, again, although not at
the Icy Bay scale. They are trying to do it well by coordinating
with local communities and using local people in jobs. The two
sales have been well-received. The University could potentially
make tens of millions of dollars from the land currently
identified. It could be as much as $100-150 million if they get
some additional lands jointly identified by the state and USFS
to come to the University if the program for additional land is
successful.
4:03:04 PM
As to the potential for oil and gas development, University land
is not on the North Slope, but royalties are received from
developments on the Kenai and the Cook Inlet.
SENATOR MEYER asked where the out-of-state land came from.
MS. DUKE replied those lands were donations. The University has
not purchased any out-of-state holdings.
SENATOR MEYER asked how much and how often land is donated.
MS. DUKE answered in the last five years they have gotten one or
two donations a year. They are usually not significant acreages.
For instance, one is the Rasmussen House in Anchorage that was
donated two years ago.
4:04:40 PM
SENATOR WIELECHOWSKI asked when the University owns subsurface
rights for oil and gas does it get the royalties instead of the
state and does the University negotiate directly with the oil
companies or is that done by the state.
MS. DUKE answered when the University owns the subsurface it
receives the revenues from whatever is below the surface,
whether minerals, or gravel, or oil and gas.
SENATOR WIELECHOWSKI asked if that money goes directly to the
University or if it is appropriated by the legislature.
4:05:52 PM
MR. JOHNSEN answered that it gets deposited into the trust and
it is not appropriated by the legislature. Like other endowments
and trusts, the balance of the trust has grown over the years,
but it took a hit in the market crash due to its cash and
equities investments. He emphasized that the earnings from the
trust are used for university purposes.
4:06:53 PM
Slide 14 indicated five years of trust balances; in FY16 it had
$138 million. He said the University is trying to diversity and
reduce its reliance on the legislature for funds.
SENATOR COGHILL said they would watch with interest how he will
approach the federal government, but it sounds like at this
point he expects the federal program would allow state lands to
be conveyed over under some federal authority. He asked if he
anticipated some federal land being added to the state land.
MR. JOHNSEN said he hoped so.
SENATOR WIELECHOWSKI asked if that is how they get around the
dedicated funds clause now: because the land was designated
prior to enactment of the Alaska Constitution.
MR. JOHNSEN answered that he wouldn't use "get around," but in
as much as it's a legal question, he would ask Mr. Harrington to
respond.
MR. HARRINGTON answered the Alaska Supreme Court noted in the
SEACC opinion that what the Alaska Legislature tried to
accomplish in 2002/2005 was analogous to how the federal land
grants had worked during territorial days when the money from
the federal land grants was used for the University. It didn't
explicitly state what the system meant with the exception of
funds that were already in place at the time the Constitution
was ratified. That was not the question before them; the court
was trying to decide whether the new 2000/2005 legislation
complied with the anti-dedication clause and said it did not.
It's fair to say the pre-statehood federal land grants did not
violate the current constitution and most logically that is
because they were already in place at the time of statehood.
SENATOR WIELECHOWSKI asked who decides how funds are disbursed
from the UA Land Trust balance.
MR. JOHNSEN answered the Board of Regents makes that decision
upon a recommendation from himself.
SENATOR COGHILL asked if he was going to look at the lands that
were already outlined in bulk by the 2000/2005 legislation.
MR. JOHNSEN replied that they certainly would look there, and at
other lands to the extent they have learned more about oil and
gas opportunities and where sustainable energy sources are
located. He noted that the UAF has the Alaska Center for Energy
and Power and they have done an "impressive census" of
alternative energy resources across the state.
SENATOR COGHILL said the only reason he brought those lands up
is because they were "compromise selections" that went through a
pretty rigorous process and he sees no sense in reinventing
that. He was also a little conflicted because the University has
about 12,000 agricultural acres outside of his home town that he
guessed had some potential gas and transportation corridors, and
between the University, the state, and Doyon, he wanted to see
something happen out there.
CHAIR GIESSEL found no further questions and thanked Mr. Johnson
and his team.
4:13:57 PM
CHAIR GIESSEL adjourned the Senate Resources Committee meeting
at 4:13 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SRES- Univ Alaska Lands Presentation-2-20-17.pdf |
SRES 2/20/2017 3:30:00 PM |
|
| SRES-List-Unviversity Land Grants by State-2-201-17.pdf |
SRES 2/20/2017 3:30:00 PM |
|
| SRES-Responses to Comm Member Questions.pdf |
SRES 2/20/2017 3:30:00 PM |